Full analysis of ocean long contract and spot tariff and 2025 long contract forecast
In the international trade, shipping by virtue of large volume, low cost advantages, has always occupied a pivotal position. However, there are many uncertain factors in sea transportation, which lead to large fluctuations in freight rates. Among them, long contract price and spot freight rate are the most concerned focus of many import and export enterprises and freight forwarders. In order to deal with the uncertainty of the market, long contract price comes into being. This price mechanism is not only related to the profits of both sides, but also a kind of prediction and game of market changes. Just recently, many customers have come to consult this aspect of the problem, and then from the concept of long contract price, background influencing factors and 2025 long contract price prediction and other aspects of detailed introduction of long contract price and spot rate related knowledge.
Long-term contract price refers to the fixed freight price agreed in the long-term transport contract signed by the shipper (cargo owner or freight forwarder) and the shipping company. Such contracts typically run for a year or more and are designed to provide both parties with price stability and guaranteed capacity. It is usually targeted at large cargo owners with stable shipments to ensure that the two sides can maintain a stable cooperative relationship and freight level in the future. The signing of long contract price helps the shipping company to lock in profits, while providing freight security for large cargo owners and reducing the risk caused by market fluctuations.
For example, a large electronics company needs to ship a large number of products overseas each year. If shipping is booked at the immediate market price every time, freight costs will be difficult to control due to market fluctuations. By signing a long-term contract, enterprises can arrange transportation at a fixed long-term contract price during the contract period, which undoubtedly greatly facilitates cost accounting and business planning, and makes enterprises more stable when making production plans and sales strategies.
The long contract price of the shipping market is not invariable, it fluctuates by market supply and demand relationship, fuel price, port charges, geopolitical factors, tariff policy, economic environment and many other factors.
1. Market supply and demand relationship
When the market demand for cargo transportation is strong, and the ship capacity is relatively insufficient, the shipping company is in an advantageous position, and the long-term contract price tends to rise. On the other hand, if the demand for cargo transportation is weak and there is excess ship capacity, the shipper has more bargaining power and the long-term contract price may be reduced. In the period of global economic prosperity, the import and export trade of countries is active, and the demand for shipping capacity is greatly increased, and the long-term contract price will rise. And in a recession, when trade volumes fall, long-term prices also come under downward pressure.
2. International political and economic situation
Political events, such as the Israeli-Palestinian conflict and the Red Sea crisis, will cause shipping routes to be blocked, and ships will increase the cost of circumnavigation, which will drive up the long-term contract price. Economic factors such as tariff policies and trade agreements of various countries will also affect the flow of goods and indirectly affect the long-term contract price. The adjustment of the tariff policy of the United States, if the imposition of high tariffs on certain imported goods, may lead to a reduction in the import volume of related goods, affecting the long-term price of the United States West, United States East route.
3. Fluctuating fuel prices
Large fluctuations in fuel prices will directly affect the operating costs of shipping companies, which will be reflected in the long-term contract price. When fuel prices rise, shipping companies, in order to maintain profits, will pass on the cost to shippers by raising long-term contract prices; When the price of fuel falls, the long-term price is likely to follow suit.
Spot rates are fluctuating according to the market
Spot rate refers to the freight price paid by the shipper at the time of booking in accordance with the prevailing market conditions. It reflects the immediate supply and demand relationship of the market, which fluctuates frequently. In the peak season of the market, due to the concentrated outbreak of cargo transportation demand, and ship space is limited, spot freight may be due to the shortage of capacity and rise sharply; In the off-season of the market, the demand for cargo transportation is reduced, the ship capacity is relatively excess, and the spot rate may fall sharply.
How to choose between long-term contract rate and spot rate
The long-term contract price is relatively stable and is not affected by short-term market fluctuations during the contract period, which is a good choice for those enterprises with stable transportation needs and high cost control requirements. Enterprises can lock in transportation costs within a certain period of time, avoid cost risks caused by market fluctuations, and facilitate the development of long-term production and sales plans. In short, long contract prices are more suitable for planned and large volume shippers.
Spot rates, while volatile, provide flexibility for some businesses. For those enterprises with unstable transportation demand and strong judgment on market price fluctuations, they can choose to book at the moment when the freight rate is low according to the market situation, thereby reducing transportation costs. Simply put, it is suitable for shippers with short term needs and small freight volumes.
Then, choose the long contract price or the spot rate, the shipper according to their own cargo transportation needs and the judgment of the market and other factors. If the enterprise has a large and stable cargo transport volume, and hopes to keep the cost stable over a period of time, then the long-term approximate price may be more suitable; If the transportation needs of the enterprise are more flexible, and a professional logistics team can grasp the market freight dynamics in time, then the spot freight may bring more cost advantages to the enterprise.
There are also industry analysts, most shippers (including freight forwarders) long contract will expire at the end of April, the long contract price will generally be based on the price of large direct passenger visa plus 200-300 US dollars. However, it is expected that by late April, if the withdrawal agreement of the second phase of the Hamas cease-fire is smoothly advanced, and the US tariff policy affects the market volume, the long-term contract price may be lowered, and the long-term contract price signed by large direct customers may also face the situation of revising the contract or granting special rates every quarter. Some large freight forwarders believe that the Red Sea crisis may be lifted in March this year, coupled with the market outlook is not optimistic, if the first quarter of the market downturn, the second quarter of the shipping company may give a special price, the price may be as low as about $1,800. This series of price fluctuations and potential changes fully reflect the uncertainty and flexibility of the long-term contract price under the influence of market dynamics.
According to the latest market dynamics, the new long term price of the United States West route is generally about $2,500 in 2025, and the United States East route is increased to about $3,500 on this basis.
In the complex and changeable shipping market, both shippers and carriers should pay close attention to the market dynamics and flexibly use pricing tools such as long contract rate and spot rate to maximize their own interests.
If you have more questions about long-term contract or spot freight, please feel free to contact Sungreen Logistics, we will provide you with professional consulting services!
Long-term contract price refers to the fixed freight price agreed in the long-term transport contract signed by the shipper (cargo owner or freight forwarder) and the shipping company. Such contracts typically run for a year or more and are designed to provide both parties with price stability and guaranteed capacity. It is usually targeted at large cargo owners with stable shipments to ensure that the two sides can maintain a stable cooperative relationship and freight level in the future. The signing of long contract price helps the shipping company to lock in profits, while providing freight security for large cargo owners and reducing the risk caused by market fluctuations.
For example, a large electronics company needs to ship a large number of products overseas each year. If shipping is booked at the immediate market price every time, freight costs will be difficult to control due to market fluctuations. By signing a long-term contract, enterprises can arrange transportation at a fixed long-term contract price during the contract period, which undoubtedly greatly facilitates cost accounting and business planning, and makes enterprises more stable when making production plans and sales strategies.
The long contract price of the shipping market is not invariable, it fluctuates by market supply and demand relationship, fuel price, port charges, geopolitical factors, tariff policy, economic environment and many other factors.
1. Market supply and demand relationship
When the market demand for cargo transportation is strong, and the ship capacity is relatively insufficient, the shipping company is in an advantageous position, and the long-term contract price tends to rise. On the other hand, if the demand for cargo transportation is weak and there is excess ship capacity, the shipper has more bargaining power and the long-term contract price may be reduced. In the period of global economic prosperity, the import and export trade of countries is active, and the demand for shipping capacity is greatly increased, and the long-term contract price will rise. And in a recession, when trade volumes fall, long-term prices also come under downward pressure.
2. International political and economic situation
Political events, such as the Israeli-Palestinian conflict and the Red Sea crisis, will cause shipping routes to be blocked, and ships will increase the cost of circumnavigation, which will drive up the long-term contract price. Economic factors such as tariff policies and trade agreements of various countries will also affect the flow of goods and indirectly affect the long-term contract price. The adjustment of the tariff policy of the United States, if the imposition of high tariffs on certain imported goods, may lead to a reduction in the import volume of related goods, affecting the long-term price of the United States West, United States East route.
3. Fluctuating fuel prices
Large fluctuations in fuel prices will directly affect the operating costs of shipping companies, which will be reflected in the long-term contract price. When fuel prices rise, shipping companies, in order to maintain profits, will pass on the cost to shippers by raising long-term contract prices; When the price of fuel falls, the long-term price is likely to follow suit.
Spot rates are fluctuating according to the market
Spot rate refers to the freight price paid by the shipper at the time of booking in accordance with the prevailing market conditions. It reflects the immediate supply and demand relationship of the market, which fluctuates frequently. In the peak season of the market, due to the concentrated outbreak of cargo transportation demand, and ship space is limited, spot freight may be due to the shortage of capacity and rise sharply; In the off-season of the market, the demand for cargo transportation is reduced, the ship capacity is relatively excess, and the spot rate may fall sharply.
How to choose between long-term contract rate and spot rate
The long-term contract price is relatively stable and is not affected by short-term market fluctuations during the contract period, which is a good choice for those enterprises with stable transportation needs and high cost control requirements. Enterprises can lock in transportation costs within a certain period of time, avoid cost risks caused by market fluctuations, and facilitate the development of long-term production and sales plans. In short, long contract prices are more suitable for planned and large volume shippers.
Spot rates, while volatile, provide flexibility for some businesses. For those enterprises with unstable transportation demand and strong judgment on market price fluctuations, they can choose to book at the moment when the freight rate is low according to the market situation, thereby reducing transportation costs. Simply put, it is suitable for shippers with short term needs and small freight volumes.
Then, choose the long contract price or the spot rate, the shipper according to their own cargo transportation needs and the judgment of the market and other factors. If the enterprise has a large and stable cargo transport volume, and hopes to keep the cost stable over a period of time, then the long-term approximate price may be more suitable; If the transportation needs of the enterprise are more flexible, and a professional logistics team can grasp the market freight dynamics in time, then the spot freight may bring more cost advantages to the enterprise.
There are also industry analysts, most shippers (including freight forwarders) long contract will expire at the end of April, the long contract price will generally be based on the price of large direct passenger visa plus 200-300 US dollars. However, it is expected that by late April, if the withdrawal agreement of the second phase of the Hamas cease-fire is smoothly advanced, and the US tariff policy affects the market volume, the long-term contract price may be lowered, and the long-term contract price signed by large direct customers may also face the situation of revising the contract or granting special rates every quarter. Some large freight forwarders believe that the Red Sea crisis may be lifted in March this year, coupled with the market outlook is not optimistic, if the first quarter of the market downturn, the second quarter of the shipping company may give a special price, the price may be as low as about $1,800. This series of price fluctuations and potential changes fully reflect the uncertainty and flexibility of the long-term contract price under the influence of market dynamics.
According to the latest market dynamics, the new long term price of the United States West route is generally about $2,500 in 2025, and the United States East route is increased to about $3,500 on this basis.
In the complex and changeable shipping market, both shippers and carriers should pay close attention to the market dynamics and flexibly use pricing tools such as long contract rate and spot rate to maximize their own interests.
If you have more questions about long-term contract or spot freight, please feel free to contact Sungreen Logistics, we will provide you with professional consulting services!
